Weekly Economic Watch: May 17, 2013

The consumer price index fell 0.2% in April. That caused the year-on-year inflation rate to drop to 0.4%, the lowest since October 2009. In seasonally adjusted terms, the CPI fell 0.4%, as five of the eight broad categories saw declines (transportation -1.1%, food -0.4%, clothing/footwear -0.2%, health/personal care -0.2%, recreation/reading -0.2%), while prices were flat for household operations and rose a bit for alcohol/tobacco (+0.2%) and shelter (+0.1%). The core CPI, which excludes eight of the most volatile items, rose 0.1% allowing the year-on-year core inflation rate to drop three ticks to 1.1%. In seasonally adjusted terms, core prices were flat. Services year-on-year inflation dropped to 0.9%. Canadian wholesale sales rose 0.3% in March. There was a 1-tick upward revision to the prior month to +0.1%. Four of the seven sub-sectors saw higher sales in March. A notable 2% jump in sales of autos and 0.6% advance in building materials contributed to offset declines elsewhere, including the 4.5% drop in the volatile “Farm products” category. In real terms, wholesale sales increased 0.1%.

In March, manufacturing shipments surprised by contracting 0.3% after expanding an upwardly revised 2.8% the month before. Consensus had called for a 0.5% advance. Sales were down in 10 of the 21 industries, including petroleum and coal products (-2.6%) and chemicals (-2%). On the plus side, transportation equipment registered a gain of 0.3%, as higher auto sales more than offset lower aerospace sales. In real terms, factory sales swelled 0.2%. The real inventory-to-sales ratio remained unchanged at 1.43.

In April, the Teranet–National Bank National Composite House Price Index™ rose 2.0% year over year, its lowest increase since November 2009. While seven of the 11 metropolitan areas covered exceeded the national average, prices deflated 3.3% in Victoria and 1.5% in Vancouver (a ninth straight decline for the latter). Month over month, the index was up 0.2% from March.

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